You are here

Capitalism is the only way, UK finance minister says in challenge to Labour


[MANCHESTER] British finance minister Philip Hammond defended capitalism as the only route to prosperity on Monday in an attempt to counter the opposition Labour Party's increasingly popular vision for a more centrally-controlled economy.

Mr Hammond is due to speak at the annual conference of his Conservative Party, seen as a chance for Prime Minister Theresa May's government to try to repair relations with the party's grassroots after a botched election in June.

Divided over Brexit and losing public support to a resurgent Labour led by socialist Jeremy Corbyn, Mrs May is leading a fragile minority government.

Ahead of his speech to party activists, Mr Hammond, finance minister for the centre-right party since July 2016, talked up the merits of a free-market economy.

"It isn't a coincidence that every country in the world, apart from North Korea, Venezuela, Zimbabwe and Cuba have adopted the market economy system that we operate here," Mr Hammond told ITV.

"It's happened because it is almost universally recognised that this is the way to advance nations, to get people's living standards up, to create jobs and sustainable progress, to support public services."

That view has been challenged by Labour, who last week at their own party conference fleshed out plans for a widescale nationalisation of Britain's infrastructure, higher government spending, and more taxation and control over the banking sector.

Mr Hammond's words echo those of Mrs May, who last week issued her own defence of capitalism - a sign of growing concern about the threat Labour poses to the pro-business orthodoxy that has underpinned British economic policy since Margaret Thatcher's reforms in the 1980s.

"As this model comes under renewed assault, we must not be afraid to defend it," he will say.

"Our economy is not broken: it is fundamentally strong."

Seven years of spending cuts by the Conservatives have tested the patience of the British public and failed to erase a deficit or bring down high levels of national debt.

Despite casting the Labour Party as Venezuelan Marxists, PM May's government has sought to win over voters with moves to address concerns over high levels of student debt and limits on pay for public sector workers.

But with Brexit on the horizon, a slowing economy and the Bank of England hinting that interest rates could rise, Mrs May's government has little room for fiscal manoeuvre.

"My job is to protect the economy. No one wants to see the economy disrupted by the process we're going through," Mr Hammond told Sky News.

"Let's remove this cloud of uncertainty from over our economy."

The British Chambers of Commerce has warned that public rifts within Mrs May's cabinet are undermining business confidence. Divisions over Europe helped sink the Conservative premierships of Margaret Thatcher, John Major and David Cameron.

"Public disagreements between cabinet ministers in recent weeks have only served to undermine business confidence, not just on Brexit negotiations, but also on the many issues where firms need to see clear action from government closer to home," British Chambers of Commerce Director General Adam Marshall said.

Last month rating agency Moody's downgraded Britain's credit rating, saying the government's plans to bring down its debt load had been knocked off course and Brexit would weigh on the economy.

The Conservatives will pledge £400 million (S$728.09 million) of additional road and rail spending, but Labour said the plans did not go far enough.

"Hammond just wants to continue with the seven years of Tory economic failure that has seen the level of investment in our country fall behind many of our international competitors," Labour's finance policy chief John McDonnell said.


BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to